Special Report: Housing Red Tape

"My goal at the end of this is to sit down with the planners and city leaders and say, ‘Here's my spread sheet. This is what it costs to actually build this. This is where I think the city can help on.’”

Posted: Jan 15, 2019 3:49 PM

Updated: Jan 15, 2019 6:29 PM

Posted By: Sean Cuellar

EUGENE, Ore. -- Affordable housing remains a growing issue in the state, and the city of Eugene is no exception. Local developer Dan Hill, owner of Arbor South Architecture and Construction, said that his current project, Blossom Cottages, has been anything but affordable.

Blossom Cottages is located on River Road. The subdivision consists of eight tiny homes on an infill lot. KEZI 9 News got an exclusive look inside the property, where each home is just 680 square feet with a 9-foot ceiling and plenty of storage space.

"We are going to have a little built-in bench, coat hooks here and a ship ladder that will go up to the loft," Hill said. "We are adding a farmhouse sink with a nice distressed granite countertop."

The mini homes will feature a built-in walnut dining table, office area with sliding barn doors, a bathroom, bedroom, outdoor storage area and plenty of windows for an open, airy feel. In addition, all appliances will be energy efficient. Hill said his original plan was to sell the homes, but costs kept adding up.

"Just a couple line items like connections to the sewer, also EWEB changes, (Systems Development Charges) for water meters. It added close to $100,000 to the cost of the project. On a project of this size, that's pretty much your profit margin," Hill said.

Hill was part of Eugene's Housing, Tools and Strategy Commission in 2018. The group looked at 83 options to increase housing affordability, availability and diversity.

According to housing affordablity statistics from the city, the median household income is $43,000, while the median price of a home is $284,000. That means 66 percent of households can't even afford to buy a home without being cost burdened.

Hill said that Blossom Cottages is a prime example of the challenges developers face.

"My goal at the end of this is to sit down with the planners and city leaders and say, "Here's my spreadsheet. This is what it costs to actually build this. This is where I think the city can help."

Hill identifies four main issues that he claims are driving up housing costs of affordable, quality homes.

Affordable land

Due to the Urban Growth Boundary in the city, land is limited. Hill said that infill costs about $300,000 per acre and the average cost of a single family lot is over $100,000. Prices are even higher in north and south Eugene.

Available infrastructure such as sewer, power, water, communications and natural gas

Fees, permits and systems development charges (SDCs)

Anne Fifield, the economic strategies manager for the city of Eugene, said the average price for permits, utility fees and SDCs on a single family home is between $17,000 and $25,000.

Hill said that for a project like Blossom Cottages, the same fees can hit the six figure mark.

"Is there a process for reducing maybe some of the fees that are related to the systems development charges or the permitting costs? Are there ways the EWEB can work with us so we are not paying $45,000 for eight water meters?"

Codes and regulations

"It's not the city doesn't want to help you to get to the goal, but they have their hands tied because the code is the way it is," Hill said.

The storage loft built into each Blossom Cottage mini home is an example. Per code, Hill said it can't be used for sleeping, but that's not the case for a mobile mini home.

Now, there's another potential cost for developers as Eugene city council considers a construction excise tax that Hill said will ultimately be passed on to the home buyer.

"Taxing the very thing that you are trying to make affordable makes no sense to me," Hill said. "What I don't understand is why we are taxing a need. Everybody has a housing need."

KEZI 9 News shared Hill's concerns with city officials and received this response from Fifield:

"Last fall, the City held a series of meetings with community members, including some builders, in the Housing Tools and Strategies project. In those meetings, we worked to identify cost hurdles like those described by Mr. Hill. The project also included an economic assessment to better understand what the City can do to lower the cost of housing production.

"Based on the Housing Tools and Strategies work, we are now working to implement some of those ideas. We’ve just begun work to address some of the administrative processes that add costs to construction. Some of the requirements are there to protect the health, safety, and welfare of the community, but others can be simplified. City staff will work with local builders, including Mr. Hill, to make procedural improvements that make it easier to build diverse housing types, affordable to across income levels."